US Senators Pass ‘More Efficient’ Energy Act

Reid Detchon, executive director of the Energy Future Coalition, along with many others, applauded US Senators Jeff Bingaman (D-NM), Olympia Snowe (R-ME), Benjamin Cardin (D-MD), and Dianne Feinstein (D-CA) for their leadership in introducing S.3591, the “Commercial Building Modernization Act,” a bill that would extend and strengthen the existing 179D commercial building tax deduction for energy efficiency improvements in commercial buildings.

Almost 20% of energy used in the US is used by commercial buildings. These forward-thinking senators have recognized the need to make improvements to the energy infrastructure of commercial buildings, especially when considering most commercial buildings stay in operation for more than 20 years.

First Draft:

US senators first introduced a series of tax deductions to get commercial building managers interested in upgrading or retrofitting their lighting systems this early attempt was referred to as Energy Efficient Commercial Buildings Tax Deduction, which surprisingly enough did not take off the way senators had hoped. Some of its features were allowances for a federal tax deduction of up to $1.80 per square foot for new buildings and retrofitting old buildings with energy-saving equipment or materials. The only caveat was that the energy used by the building must be 50 percent less than the guidelines established in the 2001 code of the American Society of Heating, Refrigeration and Air-Conditioning Engineers (ASHRAE).

In addition, 179D also allowed for a partial deduction of up to $0.60 per square foot for individual system improvements, such as improvements for commercial lighting, windows or HVAC.

The New Bill:

This new legislation strengthens the old bill and makes benefits available through the end of 2016, it also allows building owners to allocate the benefits to third-party businesses.

Ironically enough, the primary benefit of the Commercial Building Modernization act is still a deduction. The deductions range from $1.00 per square foot for energy savings of at least 20 percent to $4.00 per square foot for energy savings of 50 percent or more. The way the deduction works now is to pay up to 60 percent of the retrofit, up front. The remaining 40 percent is then disbursed upon verification of the performance of the completed upgrades.

The Bottom-Line:

The Real Estate Roundtable, Natural Resources Defense Council(NRDC) and US Green Building Council (USGBC) project thousands of new manufacturing and construction jobs to be created by the passing of this act. This is great news for manufacturers and people looking to get back to work in America. The USGBC, Roundtable and NRDC says this act will generate more than 77,000 construction, manufacturing and service jobs throughout the country—while achieving greater national energy security and independence.

9 thoughts on “US Senators Pass ‘More Efficient’ Energy Act”

I’ve been following this bill with a lot of interest since it was introduced in September this year. Unfortunately, I think your article title is a little misleading–the bill has only been introduced and referred to committee–it has a long way to go before it’s passed into law. Let’s keep our fingers crossed, because this would be great improvement over the current law that will expire at the end of 2012.

Most large commercial buildings have a chimney poking out the roof, and leaving those chimneys is a whole lot of HOT exhaust being blown into the atmosphere.
Global Warming?
This is heat energy that was supposed to be used to heat these buildings.
Is Increased Natural Gas Energy Efficiency included in this More Efficient Energy Act?
What natural gas is not wasted today, will be there to be used another day.

On occasion, I forward RSS feeds such as this to dozens of business contacts that might benefit from the news it reflects. Guess I’ll need to include a disclaimer that the information may not be correct. Not sure who’s responsible for the title containing the word “Pass”, but some level of validation prior to publishing might be in order.

Correction … the current law and the related EPAct 179D energy tax deduction for private building owners or tenants with new buildings or renovations to existing buildings, or even designer architects/engineers of public buildings … expires at the end of 2013, not the end of 2012. We complete approx 200+ 179D certifications per month. Let me know if you have any questions.

Hope it’s written better than EPAct 2005, which was was written in such a ways as to make most HVAC improvements for existing buildings impossible to qualify. As I recall, the software packages that were acceptable to the IRS for calculating energy savings were/are incapable of modeling and considering many new energy-efficiency technologies. Outside calculations are not allowed to be used in the programs.

A few years ago the situation was hopeless – the IRS certainly didn’t care and legislators don’t understand the details. If anyone knows whether or not the situation has changed, then please advise. EPAct 2005 left the single biggest chunk of available energy savings untouched. It stifles both innovation and energy efficiency and cost the country billions of dollars every year.

With the President discussing climate change legislation as the first non-economic/jobs issue in the State of the Union address, energy efficiency is getting some attention again. Still going to be a hard sell in Congress.